Accountant Responsibility To The Government Research Papers Example
Type of paper: Research Paper
Topic: Accounting, Accountant, Finance, Client, Responsibility, Company, Government, Audit
An accountant is a valued and a trusted employee that all business organizations need (Brief, 2010). The accountant has access to the company’s finance and possesses some control over where the money is being spent. The responsibility of an accountant requires them to provide the unbiased advice to the business or person they represent. This is in regards to spending saving money, buying, clients, creditors and all other financial avenues. The accountant position often requires high integrity and real desires to provide the best services for the client or company they represent (Holland, 2009). Accountant responsibility majorly revolves around the financial well-being of the individual or company that employs them. In most cases, they review financial reports done by various departments, by checking and counter checking all the aspects of the report, to determine if any changes need to be made. Accountants often devise a financial plan that works for the individual or company they represent. Furthermore, they ensure all the laws and regulations are followed precisely when recording the reports. They are at the same time responsible for supporting external audits and conducting audits so as to remain updated on all of the financial transactions and activity to ensure finance are in order (Levy, 2010).
Accountant responsibility further requires the accountant to be so proficient with computer software programs so as to give them the ability to keep track of important information. The aspect of creating a budget plan that can be implemented to keep finances in order is another fundamental responsibility of an accountant. The preparation of profit and loss statements along with other records such as the monthly closing and cost records are further responsibility of an accountant (Napier, 2009). The responsibilities of accountants are, therefore, wide, but it’s their basic requirement to have the ethical responsibility to be discreet and honest when handling finances and keeping all the information confidential.
Similar to their counterparts in public accounting and industry, the Certified Public Accountants in government have the sole responsibilities in areas financial reporting, auditing, and management accounting (Levy, 2010). The Accountants in government have the opportunity to evaluate the government department’s efficiency and agencies at the federal, state and even within local levels, and advice decision makes on the use of the resource entity.
Accountants have several responsibilities to the federal government's departments. These include investigating the white collar crime, managing government agencies financial statement audits and performing research analysis on financial management issues (Brief, 2010). Furthermore, they have the responsibility of testifying before a legislative committee on an audit or the impact of pending tax.
In this level, the certified accountants are involved so much in conducting performance, financial and compliance audits (Levy, 2010). These audits may include analysis of district schools ability to remain viable, workers effectiveness compensation system and the audit of regulatory compliance of hazardous waste programs.
Some of the audits performed by the accountants at all levels of government include:
This is an independent evaluation of an organization's operation with the main aim towards making it work better faster and cheaper. The audit may at the same time determine whether management is fulfilling its mandate to the taxpayers by providing services effectively intended to meet its goals and objectives (Brief, 2010).
This aspect includes the financial statement or the financial-related reviews or audits. The main focus of the traditional financial statement audit is the verification of information that is provided through the entity’s financial statement (Napier, 2009). The financial audit may further involve a review of the internal control over financial operations and typically result in a letter to the top management that identifies weakness and recommends any corrective action.
This aspect determines whether the firm or organization is following the provisional law contractual grants, regulations or loan agreement (Holland, 2010). The main purpose is to identify the main instances of significant deviation from specific requirements and seek corrective measures.
Accountant’s Responsibility to Clients
Accountants like medical doctors have a certain responsibility to their clients. The clients might vary from companies to individuals. As a management accountant, the clients are internal to the organization and may include departmental managers, the executive team and immediate supervisors (Napier, 2009). In both types, a professional accountant should conduct himself professionally and should be aware of the financial responsibility to the client. Some of the responsibilities include;
The accountant should not share any financial information with third parties unless when specifically directed by the client to do so. Financial information remains confidential information in all aspects.
When hired by a client to keep track of financial records, then it is the responsibility of the accountant to keep the records up-to-date. Accountants who manage cash flow for their clients’, needs to provide an updated cash-flow report on schedule.
Consultation and advice
The main duty and responsibility of certified public accountants are to provide to their clients an analysis of the market trends, results of product sales and advice on the real estate and investments.
Any accountant in any field needs to be above reproach. This aspect includes honesty and trustworthiness. An ethical accountant is the one that follows the accepted principles. They adhere to a professional code of conduct in their daily practices (Brief, 2010).
Accountant responsibility to third parties
It is important to note that professional accountant liability towards ordinary negligence when conducting an audit of its client’s financial statement is confined to the client. He is only liable for damages to his client based on fraud and negligence (Levy, 2010). Meanwhile, the accountant is liable to third parties who he knew were relying on the financial audits for fraudulent conduct.
The case of security stock exchange vs. the good year tire & rubber company is a classical example of cases that has been raised by an accountant and accounting firms. The case involves violation of records books and the internal control provisions of FCPA by Goodyear. From the year 2007-2011 the company’s subsidiary in Kenya and that in Angola routinely paid bribes to employees of the government-owned entities and private firms to obtain the tire sales. The same subsidiaries obtained were then used to bribe police taxmen and other local authorities. The company’s subsidiaries in Kenya and Angola made over $3.4 million in illicit payments. All the bribery payments were falsely recorded as legitimate business expenses in the books, and the records were consolidated into the company’s book and records. Goodyear failed in its responsibility to the company itself and the governments of the subsidiary countries. The governments depend on the tax levied on such foreign trades while Goodyear bribed the tax officers. This aspect was an integrity failure on the part of the company. Goodyear at the same time failed to prevent or detect the improper payments since it failed to implement the adequate FCPA compliance controls and trainings at the subsidiaries.
The matter of Child, Van Wagoner &Bradshaw (CVB)-an accounting firm based in Salt Lake City vs. SEC is a typical example of client responsibility Violation. The proceeding arises from CVB failure to comply with PCAOB auditing standards. The firm failed to plan the audits properly and supervise client’s assistants, and at the same time failed to act with due professional care. This was a massive failure of its client Yuhe International because they were aware or should have been aware of the audit deficiency but failed to address them appropriately.
The matter of Mark V-Server, CPA vs. SEC illustrates an example of third party violation. Mark acted as a PPD in Ernst $Young National office and served as the independent review partner audit of Bally’s Total Fitness Holding corporations financial statement. Bally 2001-2003 financial statement was found questionable and bally was found to have engaged in fraudulent financial accounting and furthermore made false and misleading financial disclosure. The Commission found that Mark was aware or should have been aware that E &Y audit on Bally’s financial statements was false because E &Y audits were not in conformity with GAAS standards. Therefore due to Marks conduct relating to the misleading and false audit opinions the Commission found him as a cause of Bally’s violations and willfully aided and abetted Bally’s violation of SE Act.
The term accountant –client privilege precludes the utmost disclosure of confidential information that a client share with his accountant (Schnee, 2012). The main purpose is to create a conducive atmosphere in which the client can provide all the relevant information to an accountant without fear that the information will be disclosed subsequently. Many legislative, therefore, have recognized a public benefit in encouraging citizens to acquire and use professional accounting services. Without the required protection, the clients might end up withholding information that would have otherwise precluded the accountant from advising the client adequately (Causey, 2009). The accounting-client privilege should be extended. The extension of the confidentiality privilege to accountants do protects the communication between the clients and their accountants from disclosure just in the same manner as the attorney-client privilege. A refresher in the responsibilities is important for the accountant to understand what is protected and what is not protected. One of the advantages of expanding the accountant-client privileges is that the privileges belong to the client. Just like the attorney –client privilege, it’s the client and not the accountant that can waive the privilege. The information flow is one of the most important aspects of a client and a medical officer or even a lawyer. In the same concept, expanding the accountant-client privilege gives room for free-flow of information to federal tax practitioners in tax related matters. This aspect would then allow the clients to discuss riskier tax strategies directly with their accountants without seeking any separate advice from the tax attorneys (Petroni, 2011). Furthermore, the more privileges from the expansion will be helpful to the taxpayers in cases where the IRS tries to subpoena the kept records of communication or conversation between accountant and his client. Expansion though does not come without some limitations and exceptions. Through this expansion, the accountant-client privilege will not be in a position to shield all tax advice in all situations. The certified public accounts should, therefore, recognize that the privileges are not a blanket of protection (Corcoran, 2011). They must, therefore, proceed with utmost caution when providing tax advice that may in a way implicate areas of exception. The expansion of the accountant –client privilege should have no bearing on the accountants whistle blowing power. The process of whistle-blowing a client or company’s audited statements is stipulated within the security exchange Acts.
In every organization or firm, the custodian of financial matters is always the accountant. As discussed above he has several responsibilities ranging from keeping good records, proper auditing of financial statements and to ensure all the financial information and records are well stored. The accountant is liable to his clients, company management, investors, and creditors, outside regulatory bodies, the government and even third parties in the process of carrying out his duties. His priority, therefore, lies with each of these parties. In a real-life world, accountants are faced with scenarios that stretch their limits beyond the laid down rules and regulations. Governments introduce budgetary regulations on its parastatals. In most cases, the parastatals managers give the accountants the privileges of making subsidiary budget allocation which though are still within the regulations but outside the government allocation (LeBlanc, 2010). The accountants are given authority to act beyond the rules and regulations and, in this case, their sole priority lies with the management of the organization. The accountant has a priority to his clients as stipulated in the responsibility; he has a priority to the third party in ensuring they do not take advantage to engage in fraudulent activities. Finally, the priority lies with the government with which he has the auditing responsibility and giving check and balances to the government expenditure.
Brief, R. P. (2010). The accountant's responsibility in historical perspective. Accounting Review, 285-297.
Causey, D., & McNair, F. (2009). AN ANALYSIS OF STATE ACCOUNTANT‐CLIENT PRIVILEGE STATUTES AND PUBLIC POLICY IMPLICATIONS FOR THE ACCOUNTANT‐CLIENT RELATIONSHIP. American Business Law Journal, 27(4), 535-551.
Corcoran, A. K. (2011). Accountant-Client Privilege: A Prescription for Confidentiality or Just a Placebo, The. New Eng. L. Rev., 34, 697.
Holland, L. (2009). Experiences from a student programme designed to examine the role of the accountant in corporate social responsibility (CSR). International Journal of Sustainability in Higher Education, 5(4), 404-416.
LeBlanc, T. (2010). Accountant-Client Privilege: The Effect of the IRS Restructuring and Reform Act of 1998. UMKC L. Rev., 67, 583.
Levy, S. (2010). Accountant's Legal Responsibility. Ayer Publishing.
Napier, C. J. (2009). Intersections of law and accountancy: Unlimited auditor liability in the United Kingdom. Accounting, Organizations and Society, 23(1), 105-128.
Petroni, A. (2011). Unpacking the Accountant-Client Privilege Under IRC Section 7525. Va. Tax Rev., 18, 843.
Schnee, E. J. (2012). Accountant/Client Privilege. Journal of Accountancy, 189(3), 78.
U.S. Securities and Exchange Commission | Homepage. (2011, January 1). Retrieved March 18, 2015, from http://www.sec.gov